Lawyers Sue Department of Education for PSLF

On December 20, 2016, the American Bar Association (ABA), a very powerful lawyer organization filed suit against the Department of Education for retroactively denying lawyers eligibility under PSLF. The ABA is a professional membership organization for lawyers that does a lot of good, too:

“works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.”

The Problem

The main issue in the lawsuit is whether that whole “lot of good” qualifies the ABA organization as a “public service organization” for PSLF purposes. We’re seeing a problem with the broad PSLF regulations, which do not specifically define public interest law services, public service for individuals with disabilities and the elderly, and public education.

While the ABA itself provides arguably non-public interest services, the ABA also has several sections and divisions which provide arguably entirely public interest services, some 100% funded by the federal government. The lawsuit essentially argues that this is sufficient.

What Went Wrong

The lawyers relied upon their approved PSLF employment certification form for many years, only to be sent notice later that there was a mistake, and all those PSLF-approved years to be wiped out. That’s retroactive denial. Lawyers relying upon the initial approval would have wasted all those years at non-qualifying employment. One of the lawyers would have been nearly at the half way point of the 10 years for PSLF, but is now about 1.5 years into PSLF.

This seems incredibly unfair to the lawyers, but then is the Department of Education ever allowed to remedy a mistake? If not, the submission and approval of the employment certification form is effectively a final approval of those years of employment. Which brings about the next issue.

The Department of Education and FedLoan Servicing do not currently have an appeals process for PSLF denials. The decision from FedLoan Servicing and/or the Department of Education is final and the lawsuit calls the Department of Education’s decision-making standards “secret.” See page 21 of lawsuit.

Why Did The Department of Education Change Its Mind?
While not completely clear, we can derive a few crucial details about the inner workings of PSLF approval from the lawsuit. Apparently, the Department of Education changed its mind on the whether the ABA qualified as a public service organization due to a “policy change that resulted in the use of new eligibility criteria.” See page 23 of lawsuit. There also appears to be some sort of “primary purpose” test, where the Department of Education claimed “no documentation from the ABA or from a PSLF applicant demonstrates that the primary purpose of the ABA is to provide ‘public interest law services’ [as] the term is defined in the PSLF regulations.” See page 23 of lawsuit.

Our guess is that the overarching ABA organization is not completely of public interest. In other words, the non-public interest branches can’t coexist with the public interest branches for PSLF. We think allowing an entire organization like the ABA to be a PSLF-qualifying organization would be overly inclusive of the non-PSLF qualifying jobs within the ABA.

What Does This Mean For You?
You should submit the PSLF employment certification form. The lawsuit shows that the lawyers’ submission and approval of the PSLF employment certification form creates reliance upon the PSLF program. This reliance creates the basis for this lawsuit. We have previously recommended that everyone submit the employment certification form so you’re on track for PSLF approval, and we continue to recommend submission of the employment certification form.

In the Department of Education’s answer to the lawsuit, we will see just how they make their decisions for qualifying under the broad employer definitions.

We predict greater transparency in the PSLF determination process, more specific definitions of PSLF-qualifying employers, and an appeals process for adverse decisions as to PSLF.

We will be tracking this case and will keep you updated.

Want to read the lawsuit? Here you go: http://www.americanbar.org/content/dam/aba/images/abanews/PSLF_filing_122016.pdf

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